Modi govt scores 7 on 10: Assocham

Published on May 17, 2015 13:34:55 PM
Apex industry body Assocham has given Modi led government 7 points on a scale of 10 on completion of one year. Modi government has worked on several issues such as Financial Inclusion, Swachch Bharat, improvement in macroeconomic situation in terms of stability in currency value, of decline in inflation etc.
"The government deserves credit for somehow making Parliament run better with the result that some of the difficult legislations have been cleared. These include raising FDI limits in insurance and Defence sectors to 49 per cent,” said Rana Kapoor, president of Assocham.

"Likewise, investor confidence and transparency have been achieved with the successful completion of auction of coal blocks and spectrum, raking in over Rs three lakh crore for the Centre and the states,” said Rana Kapoor.

However, the NDA Government has to work on taxation issues, particularly with regard to FIIs’ problems on retrospective liabilities, taking some big-ticket infrastructure projects off the ground, while it has been well-conceded that the immediate growth stimulus has to come from the government front-loading its allocations in this area.

According to Assocham, the Prime Minister’s foreign visits have brought in qualitative change in the way our economic diplomacy is being pursued. "Our missions abroad are much more aligned with the economic priorities while our efforts in Yemen crisis and Nepal earthquakes have come for great appreciation,” he said.

Another area which is receiving a lot of priority space is the power including non-renewable energy like solar, wind and others. With pressure from the industry and the government, the coal production has improved in the last one year. In the power sector, the reforms must be pushed fast in the area of distribution and transmission. In the absence of these reforms several discoms are not ready to buy additional power while generation has improved. 

While the Prime Minister’s Jan Dhan Yojna has brought in Rs 14,000 crore in the banking system by 14 crore people poor , even though it was a zero balance scheme, the challenge lies in making these accounts active and not allow them to remain dormant. Like PAHAL for LPG subsidy, more and more government schemes should be linked with the Aadhaar linked bank accounts. 

The economic growth is projected to be 7.8 per cent in the current financial year while in 2014-15, the growth was 7.4 per cent, according to new CSO data series. While this sounds great, the numbers are somehow not translating into the situation on the ground as was clear from the shortfall of direct tax revenue by 14 per cent to the target in 2014-15.

The immediate challenge lies in dealing with the agrarian crisis with concerns of less than normal Monsoon and the damage done by unseasonal rains in February-March. The advantage of low inflation must be retained with better food management. Retail inflation has moderated significantly from 11.2 per cent in November 2013 to 5.2 per cent.

Likewise, the focus should not move away from the fiscal consolidation. In the last three years, the Gross Fiscal Deficit of the centre has declined by over 1.5 percentage points of GDP. 

According to the fiscal roadmap, the fiscal deficit should reach a target of three per cent in 2017-18. The current account deficit (CAD declined sharply by more than 3 percentage points of GDP in 2013-14 and further to 1.3 per cent in 2014-15. Excess capital flows have led to an all-time high forex reserves of $ 343 billion, enabling the country to deal with any global crisis in a better way.